Lord O'Donnell is right, and he's not the first to make the point. But we can't pretend that merely taking away benefits from rich pensioners would make everything all right, nor blame the young's fate all on the crash and Coalition. It wasn't that great to be young in the boom, either: from 2002 to 200 8, median incomes for those in their 20s did not grow at all.

Static in the boom, the young have been the biggest losers since the crash. For those in their 20s, median incomes have fallen by a net 12 per cent since 2008, almost twice as big a drop as any other age group has suffered. And it gets worse: the figure is before housing costs. Even with the Help to Buy scheme, potential buyers under 30 cannot afford mortgage payments for 90 per cent of properties on the market in eight out of ten local authorities. This wouldn't really matter if rent was OK, but in London (the best bet for getting a job) rents have risen by 4.8 per cent in the last year.

But the young's biggest problem is jobs: there aren't enough of them. 350,000 18-24 year old claim Jobseeker’s Allowance. What really matters is the number of young people not able to get out of this rut: the total claiming JSA for over a year has risen from 16,500 in May 2011 to 67,100 today (though it has fallen back by 10,000 in the last year). The risk is of an emerging generation lacking the confidence, experience or skills to be deemed useful at work. The longer you are unemployed, the easier it is to stay there, no matter how desperate you are to get a job: as Tim Harford writes, "employers are using long-term unemployment as a quick – perhaps even automated – reason to disqualify applicants for oversubscribed vacancies."

So what can be done? Alan Milburn thinks the answer is to offer everyone a guaranteed job. Mr Milburn wants the Government to cap the amount of time that jobless 18-24 year-olds can spend on benefits by introducing a “job guarantee". It's an idea very similar to that floated by Labour, guaranteeing all under-25s a job after a year without work.

Obviously it's not that simple. Labour say their idea would be funded by bankers' bonuses – but they've used this to fund 10 other things at various points this Parliament. Then there's the jobs themselves. Would they be anything more than a Soviet-style wheeze? Tories liken Labour's plan to one in Egypt, where long-term unemployed are handed police badges and marked as in work. And Labour's plan would involve paying the minimum wage, despite their push to increase use of the living wage. So there's plenty of questions here: it's a deeply statist, top-down solution. If the jobs just amount to digging up the ground and filling it back up again, firms won't find those employed any more attractive.

It's all very imperfect. But it's not as if the alternatives are working: Nick Clegg's £1 billion Youth Contract (itself a repackaged version of an old Labour scheme) has flopped.

For young people, this isn't just about stoically accepting a few years of pain. The danger is that a lifetime without stable employment awaits. This isn't only bad news for them, but will be massively costly for the state, which will end up footing the bill. Yes, the solution proposed by Milburn and Labour appears deeply flawed. But at least it's a recognition that something must be done.